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The Kazakh Economy under the USSR  by Choung-ho Jason Lee

Economy of Kazakhstan
by Mike Haynes



The Kazakh Economy under the USSR

by Choung-ho Jason Lee

Kazakhstan is a huge country with a land area of 1,050,000 square  miles (almost twice the size of Alaska).  It occupies a large portion of  Central and Northern Asia, extending from China to borderlands of  Europe.  Kazakhstan is also a resource rich country and one of only four  former Soviet republics that is a net exporter of energy.

Kazakhstan was formerly based almost exclusively on agriculture.  The Kazakh economy experienced rapid industrialization during the Soviet  Regime.  Industry comprised only 15 percent of total production in the  late 1920s. (Netscape)

Because of Kazakhstan's vast natural wealth, mining continued to  develop and became a main sector for the economy.  Its mineral resources  include 99 of the 110 elements of the periodic chart, and it has the  largest reserves of chromium, tungsten, copper, lead, and zinc ores of the  former USSR.  It has proven to contain 1,600-2,100 million tons of oil,  1,600-1,800 billion cubic meters of gas, 50 billion tons of coal, and  several huge hydroelectric power stations.  Manganese, nickel, iron ore,  chromium, Iceland spar, and cobalt are among the other minerals mined.   Over the past 70 years exploitation of this natural wealth took place  within the framework of an integrated USSR-wide economy.  Petroleum and  natural gas deposits were discovered in 1960 on the Caspian Sea coast.   The Irtysh Qaraghandy Canal, the largest water diversion canal in the  former USSR in terms of volumes, was built to serve mining activities in  the north-central part of the country.  (Wyzan, p.82)

In addition to these natural resources, Kazakhstan had an  extensive agricultural sector.  Before 1920, agriculture consisted  primarily of nomadic herding.  During the Soviet period crop cultivation  was greatly expanded, due in part to widespread mechanization and the  construction of large scale irrigation projects.  Kazakhstan was a  source of food for Russia.  Kazakhstan accounted for about one third  of the USSR's wheat production and furthermore, some 40 percent of its  agricultural output was exported to Russia.  Its wheat is grown  primarily in the north and other crops including rice and cotton are  grown on irrigated lands in the south of the country. (Encarta Encyclopedia)

Kazakhstan was also a major site for Soviet defense installations,  and for the Soviet space program.  The main Soviet cosmonaut center, the  leading space launch facility in the former USSR, was located at Baikonur  and extensive nuclear testing took place in the Semipalatinsk region.  (Grolier Encyclopedia)

Kazakhstan was heavily dependent upon Russia under the former  Soviet Union.  It served as a source of food and natural resources for  Russia.  Some 40 percent of its agricultural output was exported to  Russia, as well as about 100 percent of its oil and 40 percent of its coal.  Less than 20 percent of GDP involved the production of goods for final use.(Wyzan, p. 82)  It seems to me that Kazakhstan sent all the raw  materials and food to Russia in order to fulfill resources needed for  factories and feed labors there.  With richness in natural resources  and land, its agriculture and mining came out to the two main  and leading branches for industry of Kazakhstan, before the transition.


 1. Netscape, "http:/"

 2. "Encyclopedia", Grolier Publishing, Inc. 1995

 3. 'Encyclopedia", Microsoft Encarta 96 Encyclopedia

 4. Wyzan, Michael L. "First Steps Toward Economic Independence"; Praeger  Publishers: USA 1995.   



Economy of Kazakhstan

by Mike Haynes, March 2001

There is not much to say about the economy of Kazakhstan before the Bolshevik revolution. The Kazakhs were a nomadic people before their way of life was altered by Russia’s expansion into Kazakhstan. While Kazakhstan has been under Russian control since 1895, they were allowed to maintain their pastoral way of life. It was not until the Bolsheviks came to power, and wanted to change the economic backwardness of Russia as well as the whole Soviet Union, that Kazakhstan began to industrialize.

To illustrate the effects of Kazakhstan's new leaders, one looks to the total production of industry. In 1920, the total production of industry was only 5.3%. However, by 1945, Kazakhstan economic production reached 66%.(Welcome to Kazakhstan) Examining the same time period in Russia shows that Kazakhstan's industry grew much quicker than that of Russia. The reason is two-fold. First, Kazakhstan is on a wealth of natural resources. Large amounts of oil, natural gas, coal and various metals are found there. Industry thrives in these conditions.

Second, World War 2 caused the expansion of Kazakh industry. “Many European Soviet citizens and much of Russia’s industry were relocated to Kazakhstan during World War 2, when Nazi armies threatened to capture all the European industrial centers of the Soviet Union.” (Kazakhstan- A Country study) The increase of industry contributed to the economy, however, it led to the decimation of the Kazak nomad and made Kazakhstan “the only soviet republic in which the eponymous nationality was a minority in its own republic.” (Kazakhstan- A Country study)

Natural resources were not the only part of the Kazakh economy. Agriculture made up a very large part. Again, information before the Bolshevik revolution is scarce so I will focus on the time between WW1 and WW2. In the years of 1929 to 1934, Russia was under the leadership of Stalin. He came up with the idea of collective farming. Kazakhstan had protested against this policy by slaughtering livestock. “In that period, at least 1.5 million Kazaks and 80 percent of the republics livestock died.” (Kazakhstan- A Country study) This had the same effect in control. (Kazakhstan- A Country study) In 1994 “GDP declined 25.4% compared with 1993, including drops of 28.5 percent in industry and 21.2 percent in agriculture.” (Kazakhstan- A Country study) However, Kazakhstan has a three stage privatization plan which they hope will turn the Russia as it did in Kazakhstan where many many people died by famine because of Stalin’s economic policy.

Post-Soviet economy for Kazakhstan has not been that great. However, there is great promise. In 1991, Kazakhstan gained its independence. However, only 8% of the industry was strictly under Kazakhstan's control. The rest was either directly under Moscow’s control or under joint republic and Union economy around. Stage one was to privatize all housing and small business which employed less than 200 people. (Kazakhstan- A Country study) This was accomplished through auctions and was almost complete by 1995. Stage two was the privatization of everything else with the exception of large industries, which includes the military industries, and mineral wealth.

Stage Three, which was to begin in late 1995, would privatize the largest state enterprises. (Kazakhstan- A Country study) Kazakhstan decided to offer a voucher system to its citizens in order to complete its privatization goals in stage three. “Vouchers then can be deposited in privatization investment funds, which in turn can buy up to 20 percent of large companies being privatized.” (Kazakhstan- A Country study) The result of all this is the stabilizing of the Kazakhstan economy. The inflation rate fell by 160 percent.


There are many problems facing Kazakhstan today. However, with the wealth of its natural resources and good planning, I feel Kazakhstan will be a very wealthy country.




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